Anderson's Department Store has the following data for inventory, purchases, and sales of merchandise for December:

Anderson uses a periodic inventory system. All purchases and sales are for cash.

Required:
1. Compute cost of goods sold and the cost of ending inventory using FIFO (round all answers to two decimal places).
2. Compute cost of goods sold and the cost of ending inventory using LIFO (round all answers to two decimal places).
3. Compute cost of goods sold and the cost of ending inventory using the average cost method. (Use four decimal places for per unit calculations and round all other numbers to two decimal places.)
4. Prepare the journal entries to record these transactions assuming Anderson chooses to use the FIFO method.
5. Which method would result in the lowest amount paid for taxes?
6. If you worked Problem 6-55A, compare your results. What are the differences? Be sure to explain why the differencesoccurred.

Transcribed Image Text:

Purchase Price (per unit) $6.00 6.40 7.00 Sale Price (per unit) Activity Units Beginning Inventory Purchase, Dec. 2 Purchase, Dec. 5 Sale, Dec. 7 Sale, Dec. 10 Purchase Dec. 12 Sale, Dec. 14 16 20 13 15 $12.00 12.00 7.50 18 12.00